Dems struggle over swipe fees

A fight raging in the Senate over credit card swipe fees could come to a head this week, pitting two Democratic camps against each other: populists vs. Wall Street supporters.

The Senate could vote as early as Wednesday on a bill that would delay new rules passed last year that cap swipe fees banks can charge merchants.

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The intra-party divide is embodied by the opposing views of Majority Whip Dick Durbin (D-Ill.), the progressive who pushed through the measure in May of last year, and Sen. Chuck Schumer (D-N.Y.), whose local constituents include banks that are fighting tooth and nail to prevent the rules from going into effect.

“This is a big political issue … you might say it’s a multibillion-dollar issue, because each month in America, over $1.3 billion is collected from customers all across America when they swipe their debit cards. Where does the money go?” Durbin asked on the Senate floor Monday. “Most of it goes to the biggest banks on Wall Street, the same banks that were just moaning and groaning a few years ago that they needed a bailout because they made some big mistakes. They’re back again.”

Sources close to Durbin’s whip operation believe the amendment, backed by Sen. Jon Tester (D-Mont.), will fall short of the 60 votes he and fellow supporters of the measure would need to stave off a filibuster.

On Monday evening, Sen. Jim DeMint (R-S.C.) blocked progress on the larger bill, making the timing of the vote on the amendment unclear.

Despite the confidence of the amendment’s backers, the vote on Tester’s amendment is set to be much closer than the one held last summer on the Durbin amendment.

Last year, the Durbin amendment cleared the Senate 64-33, with nine Democrats voting against the provision and 17 Republicans voting yes. Of the nine Democrats who broke with Durbin, seven are still in Congress, and of the 17 Republicans, only two — John Ensign of Nevada and George LeMieux of Florida — are out of office.

Tester’s decision to support the delay has drawn attention back home.

For weeks, the retail industry has been running radio ads in Montana criticizing him for “help[ing] the big banks swipe our money.” A new poll, commissioned by retailers, shows three-fourths of Montanans back limits on fees banks and credit card companies charge merchants when consumers use debit cards.

And local newspapers have run stories portraying Tester as out of touch with average voters who oppose his bill.

“A populist Democrat like Jon Tester has a difficult dilemma,” said David French, the top lobbyist for the National Retail Federation, a trade group that has been running a $1 million-plus campaign against Tester and his bill in Montana, other states and Washington, D.C. “How does he explain voting with MasterCard and Visa, which are located in San Francisco and New York, and voting against consumers and retail merchants in Montana?”

Tester doesn’t appear to have the 60 votes needed to beat back a filibuster from his own party. And while Senate Majority Leader Harry Reid (D-Nev.) is opposed to the bill, he seems happy to put it up to a vote if the Montana Democrat thinks it will give him a political edge in 2012.

But Tester’s efforts have irked fellow Democrats who fought for the swipe fee caps as part of last year’s Wall Street reform law. And the fact that the vote will come down to the wire won’t play well for Democrats, even if there are only a handful of defectors.

“There are members on both sides of the aisle — especially those who are in cycle — who are not looking forward to this vote because of what it is: another bailout for Wall Street banks,” said a Democratic aide. “It’s like Wall Street wrote itself a blank check, Tester signed it, and now he’s making his colleagues cash it. Worse still, it’s going to fail, but Tester is forcing his colleagues to go on record anyway.”